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Renewable energy: where yesteryear meets tomorrow

Just down the dirt track is Cimarron, one of the US' old Wild West towns – little more than a creek, a crossroads and a ramshackle hotel where, it's said, Billy the Kid once drank, and where bullet holes in the ceiling have been preserved.

That's history. But neighbouring this world of yesteryear, in this remote spot in northern New Mexico, is the world of tomorrow. Welcome to Cimarron Solar Facility. It will be the biggest solar facility in the US when it is finished early in 2011. The half a million photovoltaic panels, covering 240 acres, will generate power for 9,000 homes.

These flat, glass-fronted panels, each four feet by two feet, are guaranteed to last for 25 years. They reflect the uptake of solar power among consumers and businesses – panels appear increasingly on rooftops everywhere in the region; they power small factories and, in one case, a small shopping centre.

But the Cimarron Solar Facility is on a different scale: it's immense. It is costing about USD 250 million to build – significantly less than a gas, coal or nuclear power station. And it represents a sea-change in America’s new energy business.

Until now the US has been notoriously devoted to hydrocarbon fuels. Oil barons funnelled money to scientists ready to pour doubt on the science of climate change, and conservative Republicans led the charge to pour scorn on those who were urging Americans to rethink where their energy was coming from. Cutting consumption and exploring renewable were not on the political agenda.

But times change and First Solar, the US' biggest solar energy company, which is building the Cimarron facility, sees commercial potential, now backed by political support, oozing from its investment. Plant manager Justin Bloch says: "There's a huge growth in interest and investment is accelerating. We're talking about billions of dollars."

Similar facilities are already planned, or under construction, in most of the US' 'sunbelt' states and there are ever-increasing levels of output in the pipeline. First Solar is even opening a plant near Toronto, Canada – a region not noted for its sunshine.

US President Barack Obama has gone out of his way to signpost the change of political will – visiting the Nellis Air Force Base in the Nevada desert for a tour of America's first solar power station, completed in 2007; visiting the new DeSoto Next Generation Solar Energy Center in Florida with its 180 acres of solar panels set amid orange groves. "There's something big happening in America when it comes to creating a clean-energy economy," he was quoted as saying.

The US Department of Energy, in its latest figures, announced a net fall in electricity production by 4%, mostly in coal and oil production, while renewable sources grew over the same period by 8%.

In the scheme of things, solar power is still a drop in America's energy ocean – green renewable represents only 8% of energy use (and of that solar power accounts for just 1%); while petrol accounts for 37%; natural gas 25%; and coal 21%. But president of the US' Solar Energies Industry Association, Rhone Resch, believes renewable will grow to 80% of energy use over a generation. Solar power, he says, will grow to provide 3% of US demand by 2015 and, at the present rate of investment and development, to 12.5% by 2020. "We have the roof space, the land and we are rapidly developing the technology," he says.

As the US emerges from its biggest economic crisis for decades, a lot is resting on the rapidly-growing green economy to create wealth – not that it may necessarily create so many jobs. When Cimarron is fully operational the only employees on the site will be a single maintenance technician and a few security guards. The ability to run such facilities virtually without a wage bill is a big incentive for investors. All the cost is in the development: sunlight comes free.

Whatever the potential, the US solar power industry still lags behind that of other smaller nations. The US is currently in fourth place in solar production, behind Germany, Japan and Spain.

Spanish developer Abengoa is said by industry watchers to be at the head of the technology race. It has started to produce 'towers of power', an alternative to vast expanses of photovoltaic panels, capable in theory of multiplying output. A field of mirrors concentrates beams of sunlight on to a receiver at the top of the tower, producing enormously high temperatures. The heat is used to create steam that spins conventional turbines. A second technology has concave mirrors super-heating oil circulating through a pipeline, transferring heat to create steam.

Abengoa's tower outside Seville is 531ft tall and there is a plan to build 'forests' of them in the Sahara, generating power to be shipped to Europe.

UHY, with its longstanding track record in the energy sector, has for the past decade been developing its expertise in the renewables market, especially at its Scotland business centre.

UHY's firm in Scotland, Campbell Dallas LLP, has been engaged by entrepreneurial clients looking at ways to diversify into long-term sustainable projects. Wind, hydro and bio-gas have all featured in their evaluation, and often investors have developed more than one outcome on the same site. 

"Clients have an appetite for alternative investment," says Ian Williams, partner. "Green is a big feature now and they see renewables on a similar basis to commercial property – three stages: land; build; and payback – but with, generally, better returns and a more favourable tax treatment."

The firm's traditional expertise in oil and gas has enabled it to establish a substantial platform of expertise in renewables: clients have included large and small-scale wind farms, medium-sized hydro-electric schemes, and small and medium bio-gas sites.

Currently, the firm has 30 projects in the pipeline, of which 10 are wind, five are hydro, 10 are anaerobic digesters (AD) and five are photovoltaic (PV). "Each week it grows," says Ian. "We are at present working on several projects with wind and hydro. The AD business is growing, often with groups of landowners clubbing-together. PV has a lot of interest from clients who own, or are developing, business parks with lots of roof space. 

"We have a very active involvement in the business structures that surround renewables projects. This involves trying to manage the expectations of the landowner and developer in a tax-efficient and fair structure. 

"But there is still not enough interest from the mainstre am banking community and we continue to lobby in an effort to get them to move."

The UHY firm has become Scotland's leading firm in the provision of accounting, tax and corporate finance advice to the SME renewables sector.
 

Contact: Ian Williams 
Email: ian.williams@campbelldallas.co.uk